In positive economic development, Pakistan has repaid $4 billion in external debt in 2nd quarter of FY 2019 - 20

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In positive economic development, Pakistan has repaid $4 billion in external debt in 2nd quarter of FY 2019 - 20

ISLAMABAD - Pakistan has repaid $3.907 billion in external debt and interest payments in the second quarter of the ongoing fiscal year. This digit has experienced a 27% increase in the past three months.

According to the State Bank of Pakistan’s (SBP) data, the external debt servicing increased by $829 million from $3.078 billion in the July-September period of the fiscal year 2019-20.

During the period under review, principal and interest payments on foreign loans went up.

Payments on principal totalled up to $3.058 billion, compared to $2.277 billion. Meanwhile, the interest payments stood at $89 million from $801 million.

The growing foreign debt will also lead to an increase in interest payments on euro/Sukuk bonds, multilateral and commercial loans.

To stabilize the country’s balance of payment position, the government had to make use of external sources, simultaneously limiting the current account deficit by 75% in the first half.

The foreign exchange reserves held by the SBP increased to $12.430 billion as of February 7th.

This, however, is piling up foreign debt burden on the country’s economy. In the second quarter of FY2020, external debt rose to $111 billion from $106 billion during the end of June last year.

Between August 18th, 2018 and June 30th, 2019 $.39 billion on account of foreign debt was repaid under the current government. In the first six months of the current fiscal year, the government paid $6.985 billion in external debt servicing.